You decide the best way to illustrate this is via a call option that he can use on a stock that might have some upside potential. If the stock does not reach the potential, the option minimizes the risk. The stock is AXQ Enterprisesa high-tech firm that did well during the Internet boom but declined when the boom turned into a bust.

If the companys new portal software is adopted by a large number of consumers over the next few months, you believe the stock can go much higher. The 6-month options are priced at US$1, the strike price is US$22, and the current price for AXQ stock is US$20.

with a table or graph included that illustrates what advice you would give Dr. Bueller on the options if the price of the stock was US$18, US$21, US$24, or US$28 at the end of 6 months.

What happens if the stock price hits US$23? US$23.01?